Travel and tourism were one of the hardest-hit industries by Covid-19 and the many effects that came out of lockdowns that were put in place to try and curb the spread. Travelling was prohibited and unsafe and to some extent it still is. There is light on the horizon with vaccination giving hope for containment of the pandemic and a relaxing of restrictions on travel. We’ve already seen inter-city travel opening up and international travel will slowly follow suit. This makes it a great time to get into the travel agency business if it’s something you’ve perhaps entertained the thought of before. Let’s discuss the key elements to building this business.
How the business works
The travel agency business is a sim[ple business model. As the name suggests you act as an agent. You connect people who are looking for travel arrangements, accommodation, activities, tours and other travel-related products with providers. The agent receives commissions almost always from the provider. The commissions are known upfront. So travel agents do not need a huge investment up front. It is possible to get the business off the ground with just running costs. Travel agents make little to no investment upfront for products. There may be small fees involved with entering into some agreements.
Find a niche
It’s great to have big ideas and have a goal of being good at everything. The reality is it’s very difficult to start with everything. You will have to start with and perhaps stay in a particular niche to succeed. Focusing on a particular segment of the market will allow you to concentrate your efforts and resources on a single thing and give you the best chance of becoming very good at it. What can you focus on? Destinations, activities, corporate, weekend travel, age groups, families there are many ways to look at the market. I would advise you to choose a market segment that you understand above all else.
Choose your agency type
The big decision you will have to make is which type of agency you will operate. You have the option of being a host agency, a franchise agent or an independent agent.
In a host agency setup, you join an organisation of agents. This is somewhat similar to the way other agency businesses work. As a host, you maintain your name and brand but you will have the advantage of getting rates negotiated for by the organisation. The main advantage here is spending less of your time negotiating with providers and more of it engaging with customers. In this arrangement, the host organisation and the agent will split the commission per booking.
Travel agency franchises run similar to other business franchises. The franchisor will have an established brand name which they promote through marketing and advertising. You as an agent will operate a franchise that will carry the name and branding of the franchisor. The advantage here is using an established name and if your franchise with the right name it comes with international recognition and therefore, international business. With franchises, the common practice is that agents (you) keep 100% of the commission and pay a regular franchise fee to the franchisor. This may include advertising and management fees. For this, the agent also gets the experience and expertise the franchisor has amassed.
The independent travel agent has their brand and negotiates their deals. Depending on the territory you are in you may also need to register for your accreditation. The advantages of this are being in full control of the business and how it runs. You may lack some of the advantages that hosts and franchisees have particularly in buying power and business know-how. However, you may find the freedom will open you up to more opportunities.
Accreditation is a very important issue in tourism and travel. Clients and customer’s need to know that they are dealing with a reputable organisation and have some sort of recourse if something goes wrong. When it comes to accreditation in Zimbabwe your first port of call should be the Association of Zimbabwe Travel Agents. They will then connect you with other important organisations such as the Zimbabwe Tourism Authority, the International Air Travel Association and the Tourism Business Council of Zimbabwe.
It’s an exciting time for tourism as we look towards it opening up again. Getting started now will give you the best chance if and when things start getting back to normal.